INTERNATIONAL DEVELOPMENT GROUP

Pakistan Country Report – Focus on Construction Sector

Prepared by : John Tan (SM/SAMD) International Development Group

March 2013

The information contained herewith is for general information only and not to be construed as advice of any kind.

Accordingly BCA does not: Make any warranty, express or implied, regarding the accuracy, correctness, completeness or use of any of the

information depicted within this report. BCA will also not assume legal liability for the use of any such information or acts or omissions committed as result of the use of this information.

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Table of Contents

1. Introduction to Pakistan …...................................................................................... 3

2. Construction Industry ............................................................................................ 9

3. Investment Scheme ............................................................................................... 16

4. Engagement by Singapore Government ………………................................................. 16

5. Market Assessment................................................................................................ 16

6. References ........................................................................................................... 18

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1. Introduction to Pakistan 3

a) Geographical Profile

i. Location

Southern Asia, bordering the Arabian Sea, between India on the east and Iran, and Afghanistan on the west and China in the north

ii. Area

796,095 sq km

b) Demographic Profile

i. Population

193,238,868 (July 2012 est.)

ii. Population growth rate

1.551% (2012 est.)

iii. Urbanization

Urban population: 36% of total population (2010) Rate of urbanization: 3.1% annual rate of change (2010-15 est.)

c) Political Profile

i. Government type

Federal Republic

ii. Capital

Islamabad

iii. Chief of state

President Asif Ali Zardari (since 9 September 2008)

iv. Head of government

Prime Minister (Caretaker) Mir Hazar Khan Khoso

v. Administrative Divisions

4 provinces: Balochistan, Khyber Pakhtunkhwa (formerly North-West Frontier Province), Punjab, Sindh 1 territory: Federally Administered Tribal Areas 1 capital territory: Islamabad Capital Territory Note: the Pakistani-administered portion of the disputed Jammu and Kashmir region consists of two administrative entities: Azad Kashmir and Gilgit-Baltistan

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d) Economic Profile 1,2,3

i. Overview 1

Characterized as semi-industrialized, Pakistan’s economy has grown tremendously since its independence in 1947. Punjab and Karachi states constitute the major share in the economic growth of the country. The first decade of the 21st century has experienced wide-ranging economic reforms particularly in manufacturing and financial services sector, leading to improvement in the country’s economic outlook.

ii. GDP (purchasing power parity)

$514.6 billion (2012 est.)

iii. GDP (real growth rate)

3.7% (2012 est.)

iv. GDP (per capita)

$2,900 (2012 est.)

v. Pakistan Economic Structure 1

Primary Sector

Pakistan’s primary sector plays a major role in the country’s economy. Primarily an agrarian economy, Pakistan produces a range of agricultural products. Around 43% of the country’s labour is engaged in the primary sector, which in turn contributes 20.8% to the country’s economy in 2009. Pakistan is the second largest producer of chickpea and the third largest producer of mango in the world according to the 2005 Food and Agriculture Organization of the United Nations. Some other major agricultural products of Pakistan include onion, cotton, rice, tangerines, oranges, apricot, sugarcane, date palm, Clementine and wheat. Dairy farming is also a large industry in Pakistan. In fact, Pakistan is the fifth largest milk producer in the world. Although Pakistan has a considerable livestock population, it spends around $40 million a year on formula milk import.

Secondary Sector

Pakistan’s manufacturing sector provides employment to 20.3% of the country’s labour force (est. 2005). Some major manufacturing industries include cotton textile and apparel manufacturing, carpets, rugs, rice, chemicals, sports goods and leather goods. Some other popular industries are construction materials, mineral, paper products, food processing and beverages. Around 51.4% of country’s exports include textile and apparel. The secondary sector experienced a growth of 5.4% in 2007-08. However, electricity shortage remains the biggest challenge in ensuring development of Pakistan’s secondary sector.

Tertiary Sector

The services sector of Pakistan mainly includes industries such as finance, insurance, transport, communications and storage that account for 24% of the country’s GDP. Wholesale and retail trade has 30% share in the GDP. With increase in the country’s software exports, the IT industry is emerging as a flourishing service industry. Despite union unrest, the Pakistani government is actively engaged in privatization of banking, telecommunications and utilities to produce more jobs in the country.

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vi. SWOT 2

Strengths

Pakistan’s rapid economic expansion and healthy foreign direct investment inflows during the presidency of General Pervez Musharraf highlights the country’s high growth potential.

Pakistan’s vast population means once the purchasing power of people improves, there is potential for a sizeable market for consumer oriented businesses.

Weaknesses

Pakistan suffers from chronic current account and fiscal deficits. This leaves the economy vulnerable to external shocks and dependent on aid and loans from multilateral institutions and bilateral partners.

Despite rapid economic growth in recent years, Pakistan’s population remains poor. Incomes are around US$1,000 per capita.

Opportunities

Rising rates of urbanisation – with the UN forecasting the proportion of city dwellers climbing from 37.7% of the population in 2012 to more than 60% by 2050 – should continue to serve as a key driver of economic growth. Pakistan’s close geopolitical ties with China should ensure that it benefits from the latter’s rise through growing trade and investment.

Threats Public discontent with the government lingers, posing a threat to the position of President Asif Ali Zardari. This could jeopardise already fragile economic stability. Pakistan’s balance of payments remains vulnerable to a spike in oil prices, as vividly illustrated by the ballooning import bill in 2008. Pakistan imports more than 50mn barrels of oil a year to satisfy local demand for fuel products and record-high prices in 2008 led to a widening of the trade deficit.

vii. FDI

1

Overview

The main vehicle for foreign investment is the Board of Investment (BoI), but it is hampered by the lack of clear authority and a continuity of leadership. Foreign investors are no longer obliged to register with the BoI, but they must register with the Securities and Exchange Commission of Pakistan and the State Bank of Pakistan. Pakistan claims the following liberal investment policy:

All sectors are open to FDI

There is equal treatment between local and foreign investors

100% foreign equity is allowed

No government sanction is required for investment projects

Full remittance of royalties, fees, capital, profits and dividends is available

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Foreign Investment inflows in Pakistan ($ million)

Year Greenfield Investment

Privatisation Proceeds

Total FDI Private Portfolio Investment

2001-02 357.00 128.00 485.00 -10.00

2002-03 622.00 176.00 798.00 22.00

2003-04 750.00 199.00 949.00 -28.00

2004-05 1,161.00 363.00 1,524.00 153.00

2005-06 1,981.00 1,540.00 3,521.00 351.00

2006-07 4,873.20 266.40 5,139.60 1,820.00

2007-08 5,276.60 133.20 5,409.80 19.30

2008-09 3,719.90 0.00 3,719.90 -510.30

2009-10 2,150.80 0.00 2,150.80 587.90

2010-11 1,634.8 0.00 1,634.8 344.5

2011-12 812.6 0.00 812.6 (46.9)

2012-13 (Jul-Feb.)

504.4 0.00 504.4 167.5

Total 23,843.3 2,805.60 26,648.9 2,789.8

Table 1: Foreign Investments inflows in Pakistan ($ million) (Note: Pakistan’s Fiscal Year runs from 1st July till 30th June)

Direct and Portfolio Investment ($ Million)

Country 2012-2013 (July- Feb.)

Foreign Direct Investment

FPI Total Inflow Outflow Net

Australia 10.6 - 10.6 (15.8) (5.2)

Austria 27.3 - 27.3 - 27.3

China 74.3 5.9 68.3 0.1 68.4

Finland 4.9 - 4.9 - 4.9

Hong Kong 139.3 1.6 137.7 50.0 187.7

Italy 123.9 0.4 123.5 - 123.5

Japan 20.5 2.0 18.5 0.5 19.0

Netherlands 21.9 150.3 (128.4) 9.6 (118.8)

Norway 74.9 298.4 (223.5) - (223.5)

Singapore 21.4 16.4 (5.0) 7.4 12.4

Switzerland 123.1 6.3 116.8 (0.4) 116.4

U.A.E. 160.5 182.9 (22.4) 5.1 (17.3)

United Kingdom 144.7 19.9 124.8 (52.1) 72.7

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United States 172.6 38.8 133.7 158.2 291.9

Other 285.2 177.8 117.6 4.9 112.5

Debt Securities

GDRs

Total 1405.1 900.7 504.4 167.5 671.9

Table 2: Direct and Portfolio Investment ($ million) (Note: Pakistan’s Fiscal Year runs from 1st July till 30th June. The figures in brackets are in negative.)

Country Wise FDI Inflows ($ Million)

Country 2000-

01

2001-

02

2002-

03

2003-

04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12

2012-13

(July-

Feb)

USA 92.7 326.4 211.5 238.4 325.9 516.7 913.1 1,309.3 869.9 468.3 238.1 233.0 133.7

UK 90.5 30.3 219.4 64.6 181.5 244.0 860.1 460.2 263.4 294.6 207.1 142.8 124.8

U.A.E 5.2 21.5 119.7 134.6 367.5 1,424.5 661.5 589.2 178.1 242.7 284.2 36.6 (22.4)

Japan 9.1 6.4 14.1 15.1 45.2 57.0 64.4 131.2 74.3 26.8 3.2 22.8 18.5

Hong Kong 3.6 2.8 5.6 6.3 32.3 24.0 32.6 339.8 156.1 9.9 125.6 80.3 137.7

Switzerland 3.6 7.4 3.1 205.3 137.5 170.6 174.7 169.3 227.3 170.6 110.5 127.1 116.8

Saudi Arabia 56.6 1.3 43.5 7.2 18.4 277.8 103.5 46.2 (92.3) (133.8) 6.5 (20.2) 8.2

Germany 15.5 11.2 3.7 7.0 13.1 28.6 78.9 69.6 76.9 53.0 21.2 28.2 3.3

Korea (South) 3.7 0.4 0.2 1.0 1.4 1.6 1.5 1.2 2.3 2.3 7.7 25.4 11.1

Norway

41.9

0.1 0.3 146.6 31.4 252.6 25.1 274.9 101.1 0.4 (48.0) (275.0) (223.5)

China 0.3 3.0 14.3 0.4 1.7 712.0 13.7 (101.4) (3.6) 47.4 120.9 68.3

Others 76.6 173.9 108.6 369.3 521.9 1,512.2 2,005.2 1,964.2 1,019.6 631.3 290.7 127.9

Total including

Pvt. Proceeds 322.4 484.7 798.0 949.0 1,523.9 3,521.0 5,139.6 5,409.8 3,719.9 2,150.8 1,634.8 812.6 504.4

Privatisation

Proceeds - 127.4 176.0 198.8 363.0 1540.3 266.4 133.2 0.0 0.0 0.0 0.0 0.0

FDI Excluding

Pvt. Proceeds 322.4 357.3 622.0 750.2 1,160.9 1,980.7 4,873.2 5,276.6 3,719.9 2,150.8 1,634.8 812.6 504.4

Table 3: Country Wise FDI inflows ($ million) (Note: Pakistan’s Fiscal Year runs from 1st July till 30th June. The figures in brackets are in negative.)

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Sector Wise FDI Inflows ($ Million)

Table 4: Sector Wise FDI inflows ($ million) (Note: Pakistan’s Fiscal Year runs from 1st July till 30th June. The figures in brackets are in negative.)

Sector 2000-

01

2001-

02

2002-

03

2003-

04

2004-

05

2005-

06

2006-

07

2007-

08

2008-

09 2009-10 2010-11

2011-

12

2012-13

(July-Feb)

Oil & Gas 80.7 268.2 186.8 202.4 193.8 312.7 545.1 634.8 775.0 740.6 512.2 612.8 339.7

Financial Business (34.9) 3.6 207.4 242.1 269.4 329.2 930.3 1,864.9 707.4 163.0 310.1 56.4 202.7

Textiles 4.6 18.5 26.1 35.4 39.3 47.0 59.4 30.1 36.9 27.8 25.3 30.3 9.2

Trade 13.2 34.2 39.1 35.6 52.1 118.0 172.1 175.9 166.6 117.0 53.0 25.3 3.3

Construction 12.5 12.8 17.6 32.0 42.7 89.5 157.1 89.0 93.4 101.6 61.1 71.8 25.9

Power 39.9 36.4 32.8 (14.2) 73.4 320.6 193.4 70.3 130.6 (120.6) 155.8 (84.9) 41.8

Chemical 20.3 10.6 86.1 15.3 51.0 62.9 46.1 79.3 74.3 112.1 30.5 96.3 (89.4)

Transport 45.2 21.4 87.4 8.8 10.6 18.4 30.2 74.2 93.2 132.0 104.6 17.4 60.6

Communication

(IT&Telecom) NA 12.8 24.3 221.9 517.6 1,937.7 1,898.7 1,626.8 879.1 291.0 (34.1) (315.3) (304.6)

Others 140.9 66.2 90.4 170.1 274.0 285.0 1,107.2 764.5 763.4 586.3 416.3 302.5 215.2

Total including

Pvt.

Proceeds

322.4 484.7 798.0 949.4 1,523.9 3,521.0 5,139.6 5,409.8 3,719.9 2,150.8 1,634.8 812.6 504.4

Privatisation

Proceeds - 127.4 176.0 198.8 363.0 1,540.3 266.4 133.2 0.0 0.0 0.0 0.0 0.0

FDI Excluding

Pvt. Proceeds 322.4 357.3 622.0 750.6 1160.9 1980.7 4873.2 5,276.6 3,719.9 2,150.8 1,634.8 812.6 504.4

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2. Construction and Infrastructure Industry

a) Overview 2

(Includes Construction Share of GDP and Growth)

Pakistan’s construction sector is expected to slow over 2013, with growth falling to nearly half the rate of 2012. The year-on-year growth rate for 2013 is forecast to be 2.79%, down from 4.7% in 2012. The market has suffered from the global economic downturn and fallout from political turmoil in Pakistan, and these have provided a double whammy to foreign investment and wider business activity in the country.

It is estimated that investment of around US$110 billion is required over the next five years to fund the infrastructure projects that will serve the needs of Pakistan's growing population. The Infrastructure Project Development Facility (IPDF) team has stated that around 11 projects, valued at around PKR200 billion (US$2.9 billion), are in the development stage.

The government's aim is to increase the flow of foreign investments for infrastructure projects. A revival of significant private sector activity in the country’s construction industry is pivotal to any hope of a return to higher growth rates. Indeed, liberal investment laws are in place that allow for 100% foreign equity in the manufacturing and infrastructure sectors, in a bid to convince foreign investors that politico-security risks in the country should not be regarded as the ‘be all and end all’ when making investment decisions.

Stagflation (i.e. rising consumer prices, subdued growth) will be a continuing concern for the construction industry in 2013. Meanwhile, the government's slow response to emergency relief has added to its unpopularity. With security still a major headache and the Prime Minister, Asif Ali Zardari, also facing a stand-off with the country's judiciary, Pakistan's overall country risk profile is weaker than ever.

Commercial real estate and public sector activity in road building have been heavily undermined by the global economic downturn and Pakistan’s parlous fiscal position. With fiscal constraints on Pakistan’s public sector persisting, this foresees only anaemic overall construction sector growth in the country over the next few years.

The key players in the industry include Gammon Pakistan (a unit of Gammon Construction, which is owned by global giant Skanska); ABB Pakistan (ABB has a significant presence throughout Asia, the Middle East and North Africa); and Descon Engineering, which maintains a very significant long-standing presence in Pakistan, but also operates elsewhere in the region. National Construction is one company that is more exclusively focused on the Pakistan market.

Figure 1: Construction Industry Value (2008 – 2016)

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Table 5: Pakistan Construction and Infrastructure Industry Data (2010-2016)

b) SWOT 2

i. Strengths

There are major investment plans underway in both the transport (roads) and power sectors.

The industry is very open to private sector participation, with liberal foreign investment regulations and a range of incentives for FDI projects.

ii. Weaknesses

Pakistan’s construction industry is at present very weak, suffering from many

problems such as a lack of financial resources. There is political instability and rampant corruption in Pakistan, which is having a

negative effect on construction activity.

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iii. Opportunities

The construction industry in Pakistan has tremendous potential; with a sizeable proportion trained abroad, today there are over 80,000 graduate engineers, 20,000 licensed constructors and 1,000 registered consultants.

With massive population growth and severe overcrowding problems, the

residential segment may provide impetus.

iv. Threats

Pakistan’s construction industry is inadequately prepared to meet the challenges imposed on the country by the WTO; if adequate measures are not taken on an urgent basis to strengthen this industry, the possibility of growth will vanish.

Possible double-dip global recession.

The government’s fiscal position is a severe concern, and a renewed turn for the

worse in general global market confidence could create a fresh public funding crisis for the country’s infrastructure plans.

c) National/ Potential Projects

1

i. Faisalabad Solid Waste Management Plant Rapid growth of urban population in Pakistan and a rising trend of migration from rural to urban areas of the country have posed additional demands on the existing infrastructure of these populous cities, resulting in uncontrolled urban sprawl, deteriorating environment, and constantly declining standard of urban services. As City District Governments (CDG) strive to improve access of common person to necessities like water and sanitation, their financial and institutional capacity also needs to be enhanced in tandem. These governments need to be efficient and financially stable to improve the sanitation systems of their respective cities for a burgeoning population. At present, solid waste management in the majority of urban towns is at best rudimentary, thus requiring the development and implementation of state of the art systems customized to the requirements of city. Realizing the deficiencies in basic infrastructure inhibiting economic growth, Government of Punjab has accorded high priority to providing an integrated sustainable community based Solid Waste Management System. With a growing population like the other major cities of Pakistan, Faisalabad also faces an urban problem of inadequate solid waste management. CDG-Faisalabad, the implementing agency, intends to rectify all these problems from its urbanized areas, comprising of four towns namely, Jinnah Town, Lyallpur Town, Iqbal Town and Madina Town, through private sector participation in the development and implementation of an integrated solid waste management project under the PPP modality. These four towns have an approx population of 2.78 Million and an area of approx 1,351 square kilometers. Approximate cost of this project is US$ 15 million. Status: Pre-qualification of investors conducted.

ii. Lahore Southern Bypass from Motorway to Ferozepur Road Traffic Engineering & Transport Planning Agency (TEPA), Lahore Development Authority (LDA) intends to develop Southern Bypass as a strategic, high speed and access controlled road for Lahore city. The development of Lahore Southern Bypass is a major component of Lahore Master Plan approved in 2002. The proposed Bypass will ultimately join Ferozpur Road at one end and the Motorway close to Niaz Baig Village on the other, besides further connectivity with the proposed Southern loop of the Lahore Ring Road. The implementing agency envisioned the proposed project to be completed through Public Private Partnership Regime.

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Proposed length of the project is 16km. The Conceptual Design of the Project includes six lanes divided Highway with controlled access having two lanes Service Roads with the proposed right of way of 200 ft including Interchanges, flyovers and Crossover Structures wherever required to maintain free flow on the proposed road. The total approximate cost of the project is US$ 25 million. Status: Technical feasibility study is completed and financial feasibility is being undertaken.

iii. Flyover/Railway Overhead Bridge at Habibabad (Wanradha Ram at Km 1168-1169 of the National Highway N-5)

Approximate Project Cost Estimates: US$ 7 Million

National Highway Authority (NHA) aims to develop six (6) lanes Flyover /Railway Overhead Bridge at Habibabad (Wanradha Ram at Km 1168-1169 of the National Highway N-5) along new alignment under Public Private Partnership Modality. The proposed expressway is a part of National Highway N-5, which is the main artery of Pakistan road network and connects seaports with other parts of the country to enhance the potential for increased international trade traffic.

It is envisaged that Flyover /Railway Overhead Bridge at Habibabad (Wanradha Ram) would be built under the Public-Private Partnership (PPP) modality with the private party given a concession for a pre-determined period to design, finance, construct, operate and maintain the project. The total length of the bridge is 1 km. Moreover, 1 km approach road on either side will also be built. Infrastructure Project Development Facility (IPDF) is assisting NHA in the development and implementation of this project. Status: Pre-feasibility study is completed and detailed feasibility study is being undertaken.

iv. Charsadda Solid Waste Management System

Approximate Project Cost Estimates: US$ 1.1 million. The government of Pakistan is committed to providing an integrated community-based Solid Waste Management system which is self sustainable through recycling of municipal waste. As part of the overall NUDP program, Charsadda Solid Waste Management project has been identified as a pilot project which, if successful, can be used as a model for other projects for provision of Solid Waste Management system in those towns and tehsils that have a population in excess of 20,000. The city administration wants to explore public-private partnership opportunities in implementing this solid waste management project. The area of the Project is about 310 ha. The 1998 population of the Project area is estimated at 55,200 persons, or 65.5 % of the total of 84,300 persons for the whole municipality. Project includes improvements to the existing Solid Waste Management system by incorporating better mechanisms of waste management. The main objectives of the Project are: - Collection of waste from urban areas and appropriate disposal at identified

landfills - Improving public awareness and community participation towards the waste

management systems and ecology, including both the domestic and commercial cleanliness

- Establishment of effective and efficient waste management systems by

leveraging suitable technologies Status: RFP will be floated as soon as security situation improves in the area.

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d) Labour Force & Wages

i. Labour Force 7

The size of the labour force is estimated at 57 million, with a participation rate of about 33% and an unemployment rate estimated 6.0% at the end of FY2010/11. Agriculture is the largest single sector, accounting for 45% of employment by occupation. Services and industry comprise approximately 34% and 21% of the labour force respectively. Child labour is prevalent – Pakistan's employed labour force is defined as individuals of at least 10 years of age, although the authorities are under growing international pressure to do more to curb the use of child labour. There had been instances of bonded labour, but this is confined to the agricultural sector. Around 4% of the labour force is educated to degree level, while the literacy rate for the entire population is 58%. Pakistan faces a brain-drain problem as many educated workers emigrate to find gainful employment overseas.

ii. Wages 5

The Tripartite National Wage Council was set up in 2000 to determine systematically the minimum wage for different business activities, industries and occupations in different provinces. The government said in 2002 that it would revise the minimum wage every three years instead of every nine years. The government raised the minimum wage in May 2012, from PRs 7,000 per month to PRs 8,000 per month, with immediate effect. Although this minimum wage remains in force in October 2012, this is now a reference wage and the individual provinces are free to set their own minimum wages since labour matters are now in their exclusive jurisdiction. By October 2012, the governments of Punjab and Balochistan provinces had set their own minimum wages at PRs 9,000; those of Sindh and Khyber had set theirs at Rs 8,000. The actual average monthly wage differs widely depending on region and industry.

Although inflation has been increasing pressure on employers to raise wages, the average wage for unskilled workers in October 2012 was PRs 7,000 - 10,000, with provisions for a one-day weekend every week on Sunday and a half working day of four hours on Friday before afternoon prayers. In the market of daily-wage unskilled workers, wages are about PRs 400 - 950 per day.

iii. Employment of Foreigners

5

Pakistan puts no restrictions on employing foreigners, and foreign companies may appoint foreign citizens as chief executives in Pakistan. Although companies that want to employ foreigners must first seek permission from the government’s Board of Investment, this is merely a formality and usually takes no more than 2.3 weeks.

e) Construction cost

6

The costs of major building and infrastructure items as of March 2013 for Islamabad are indicated in Table 6. This type of data is only available for Islamabad province.

Description Unit Islamabad

Coarse Aggregates

Machine crushed stone

Machine Crushed Stone 19mm ( 3/4" ) dia (Local) M³

Machine Crushed Stone 19mm ( 3/4" )dia (Margallah) M³ 950.42

Brick Ballast more than 39mm (1½" ) M³ 600.00

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Coarse Sand (Local) M³ 847.00

Coarse Sand (Lawrencepur) M³ 890.33

Ordinary Portland Cement (grey) Bag 440.00

Ordinary Portland Cement (white) Bag 730.00

Sulphate Resisting Cement Bag 457.00

Mild Steel rebar 1/2" Ø (Deformed) Grade 40 Ton 77267.00

Mild Steel rebar 1/2" Ø (Deformed) Grade 60 Ton 82600.00

Water

Water for construction Ltr. 0.70

First Class Brick size 229 x 111 x 75 mm ( 9" x 4-3/8" x 3" ) No. 7.50

Second Class Brick size 229 x 111 x 75 mm ( 9" x 4-3/8" x 3") No. 5.75

Burnt Brick Tiles

Size 228 x 114 x 51 mm (9" x 4-1/2" x 2") No. 6.50

Solid Block (Plain Concrete)

Size 150 x 200 x 300 mm ( 6" x 8" x 12" ) No. 45.00

Hollow Block (Plain Concrete)

Size 200 x 200 x 400 mm ( 8" x 8" x 16" ) No. 47.50

M.S. Sheet 16 SWG Kg 88.29

Mild Steel Angle Iron

38 x 38 x 6 mm ( 1 1/2" x 1 1/2" x 1/4") Kg 82.29

T.Iron

38x38x6mm (1 1/2" X 1 1/2" X 1/4") Kg 75.29

Steel Flat

Ms Flat 20 x 3mm Kg 79.29

Deodar Wood (Class-A) M³ 105010.00

Partal Wood M³ 33725.00

Kail Wood (Class-A) M³ 33175.00

Lasani Board 19 mm (3/4") thick (Local) M² 655.88

Leminated board (both side) 19 mm (3/4") thick M² 525.00

Glass Clear Local

5 mm thick M² 635.00

Glass Mirror

3 mm thick M² 675.00

Weather Shield Paint Ltr 480.00

Plastic Emulsion Paint Ltr 448.75

Synthetic Enamel Paint Ltr 501.37

Marble Tile and Slabs

Ceramic Tiles (Local Made)

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size 300 x 300 mm (12"x 12") light color glazed finish M² 636.00

size 300x300mm ( 12"x 12" ) light color matt finish M² 636.00

Porcelain Floor Tiles

Light-Plain size 400mm x 400mm (16" x 16") M² 1650.00

Light-Plain size 400mm x 400mm (16" x 16") M² 1450.00

Light-Plain 16x16 size 400mm x 400mm (16" x 16") M² 1250.00

False Ceiling

Acoustic tiles 610 x 610 x 12 mm (24" x 24" x 1/2") M² 274.00

Mineral fiber tiles 610 x 610 x 12 mm (24" x 24" x 1/2") M² 392.00

Plaster of paris 610 x 610 x 12 mm (24" x 24" x 1/2") M² 403.00

Thermopore sheet tiles 610 x 610 x 19 mm (24" x 24" x 3/4") M² 95.00

Skilled Labour

Carpenter Hour 90.00

Mason (First Class) Hour 94.00

Plumber Hour 90.00

General Foreman Hour 132.00

Electrician Hour 80.00

Black Smith Hour 85.00

Painter Hour 80.00

Unskilled Labour

Labourer Hour 60.00

Helper Hour 55.00

Construction Machinery

Concrete Static Mixer 0.25 M³ (1 Y³) Hour 651.98

Concrete Vibrator (160cc) Hour 169.51

Welding Plant Unit Hour 719.02

Steel Bar Cutting Machine Hour 105.15

Floor Grinding Machine (Chemical) Hour 70.00

Plate Compactor Hour 434.02

Saw / Wood Cutter Machine (Petrol) 45 cc Hour 623.37

Pressing Machine for Door Shutter Hour 125.00

Paint Spray Machine Hour 45.00

Table 6: Costs of Major Building and Infrastructure Items (March 2013)

3. Investment Scheme 1

A fundamental issue for foreign investors is their freedom to enter a market and conduct business without burdensome restrictions. Historically, since 1997, Pakistan had established and maintained an open investment regime, which serves as a strong advantage compared to

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regional competitors. In order to increase its competitiveness as an investment destination, the Investment Policy 2013, maintains the open policies and continues to expand the opening and liberalization process to all sectors and generalizes the policies across all sectors to have uniformity and openness across the economy. Refer to Board of Investment Pakistan for details on Investment Policy 2013.

4. Engagement by Singapore Government 4

2011

A delegation from Pakistan’s National School of Public Policy (NSPP) made a study visit to Singapore from 21 to 25 November 2011. The NSPP is a training institution for civil servants in Pakistan.

2007

Minister of Commerce Humayun Akhtar Khan of Pakistan visited Singapore from 24 to 25 May 2007 to inaugurate the International Symposium on Pakistan organised by the Institute of South Asian Studies. During the visit, Minister Humayun Akhtar Khan also met Senior Minister Goh Chok Tong.

5. Market Assessment

a) GDP growth 8

Real GDP growth has been constrained by the volatile security environment, structural imbalances in the economy and ongoing electricity shortages. In 2012/13-2016/17 economic growth will remain lacklustre, averaging 3.7% a year. Private consumption, which now accounts for fewer than 90% of nominal GDP, will remain the primary driver of economic expansion in the forecast period. Expenditure on investment is expected to contract for the fifth consecutive year in 2012/13. Investment spending as a proportion of nominal GDP has almost halved in the past five years, from 20.5% in 2007/08 to 10.9% in 2011/12, owing to tightness in local credit markets and a lack of foreign financing (exacerbated by both the global economic slowdown and the poor domestic security situation). Government consumption growth, which reached 8.2% in 2011/12, will accelerate to 9% in 2012/13 as the government continues to spend liberally in the run-up to the general election. Pakistan's economic expansion will continue to fall far short of potential, owing to poor policymaking, energy and water shortages, and security concerns and low investment in human capital. The latter shortcoming makes it unlikely that the country will benefit from the potential demographic dividend stemming from its large working-age population.

Table 7: Economic growth forecast of Pakistan

b) Business Environment 7

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Although opportunities to invest in Pakistan have improved during recent years, the business environment still suffers from poor infrastructure and, most problematically, an uncertain security situation. In addition, procurement processes are bureaucratic and often lack transparency, raising the risks of corruption. However, Pakistan does have one of the most liberal foreign investment regimes in South Asia, with a commitment to low tariffs and 100% foreign equity permitted in certain sectors. i. Strengths

Pakistan has one of the most liberal foreign investment regimes in South Asia.

One hundred percent foreign equity is permitted in the manufacturing and infrastructure sectors.

Ongoing reform of Pakistan’s trade regime is reducing tariff barriers. Duty on

capital goods, plant and machinery not manufactured locally is now just 5%, having earlier been between 5-25%.

ii. Weaknesses

Failing infrastructure, bureaucratic delays and widespread corruption are key concerns for investors looking to do business.

Intellectual property rights are poorly enforced. Pakistan, a leading producer of counterfeit goods, remains on the Office of the US Trade Representative’s Priority 301 Watch List.

iii. Opportunities

A pro-privatisation climate has been engendered, making further sell-offs of state firms possible, although expecting the rate of privatisations to be slow and inconsistent.

Pakistan is seeking to attract more investment from the Gulf region, benefiting

from its surging oil wealth and access to the burgeoning Islamic finance market.

Anti-Western militants have been known to target foreign workers and businesses, with recent reports suggesting extortion of multinational companies could be on the rise.

Pakistan’s uncertain security environment makes it a high risk destination in the

eyes of investors.

c) Current engagement IDG invited Pakistan High Commissioner to speak on ‘Investment Opportunities in

Pakistan’ at the Project Finance Conference held on 11 March 2013.

d) Future engagement

Continue to source for potential projects for our companies.

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6. References:

1. Board of Investment Pakistan: http://www.pakboi.gov.pk/

2. BMI Pakistan Infrastructure Report 2013.

3. Central Intelligence Agency: https://www.cia.gov/library/publications/the-world-

factbook/geos/pk.html

4. Ministry of Foreign Affairs Singapore:

http://www.mfa.gov.sg/content/mfa/countries_and_region/south_asia/rest_of_south_asia.html

5. Economic Intelligence Unit: Country Commerce of Pakistan (2012).

6. Pakistan Institute of Cost and Contracts: http://picc.org.pk

7. BMI Business Forecast Report (Q2, 2013).

8. Economic Intelligence Unit: Country Report Pakistan (March 2013).